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701 Fairview in Incline received a NOD today. The 5 acre lot was purchased for $4,025,000 ($4.2M with plans and all that IV transfer garbage) and financed with a $1,950,000 loan at 7%. The NOD cites 7/13/06 as the missed payment date, but this was the sales date and probably a typo that will need to be re-recorded. Still, over $2M down payment on a dream site that looks like it turned into a nightmare. It is listed at $3,700,000.
The wording in the MLS listing is worth examining. "Priced at land value." Probably true, assuming raw land values in IV haven’t declined too much over the last 6 years. Right. "The opportunity is HERE and NOW!" Opportunity is industry speak for this property needs serious help, and the CAPS sure caught my eye. "…abiltity to create a grand residence which includes a guest house". Ability is the sister of opportunity. Hey, take a look the house in the pictures – it is the "completed’ guest house, a 2 +2 at 2622 SF. Notice the lack (or cropping) of interior photos? HMMM. "Complete this beautiful canvas with your lifestlye." Does that sentence make any sense whatsoever? "Owner has $7M into this … estate". Bull dookie, unless the guest house came in at over about $1000/SF.
So for $3,700,000, a buyer can get a guest house with a view. I just don’t get Incline Logic, I guess.
Another interesting new listing was 2440 Mountain Spirit in the ‘Sett. REO listed at $742,500. My recollection is that this property was well over $2M at one point, and had a connection to a high muckity-muck at Gournet Magazine. At 7538 SF as recorded, this is less than $100/psf for a Somersett MegaMcMansion.
skeptical
How can anyone claim IV is anywhere close to bottom?
Carleton
“less than $100/psf for a Somersett MegaMcMansion.”
So the biggest house in Somersett is now less than $100 psf.
Well, that’s right at the median sold psf, isn’t it?
Just down the street on Russell Pointe Cr. in Somersett is a cul-de-sac of 3200 or so sq. ft. houses that sold for about $745K in 2005. So in 5 years that same $745K has gone from buying a 3200 sq. ft. house to buying a 7500 sq. ft. house in Somersett.
That is what is called a trainwreck.
This house is the perfect example of why the suggestion of a bottom at the upper end of the market is totally absurd.
And in case some still don’t get it, today in Reno $750K is the upper end. $1.5 million is not the upper end. $1.5 million is fantasyland.
billddrummer
I’m waiting.
If things keep going the way they are, I’ll be able to afford to buy in IV and pay cash.
Sully
billd – then check out the Fairview house. A steal at $1411/sq ft. A bit unfinished, it needs drywall, insulation and finish trim. Might want to bring a kitchen too! 🙂
BanteringBear
This is more clear evidence that Smarten’s Incline Village McMansion is immune to price declines.
geopower
wow, nice catch mike.
Eagleweb really tells the story on the Mountain Spirit house. In 2006 WaMu offered up a 1.48m ARM construction loan and BofA a 350k HELOC before the house was even built, even after the first construction lien was filed for nonpayment by the geotechnical firm that did the foundation survey work. 8 more construction liens starting a year after that whopping 1.8M capital infusion. NOD filed by Chase (WaMu) september 09 for stopped payment in april- I guess the banks do pay attention to failure to pay on loans this big. Additional liens from the HOA and city, and NOD from BofA 10/09 for failure to pay 2/09. Certificate of Mediation and concurrent NOS 2/17/10. It went back to Chase for 1.25M on 3/25 and now they’re asking a little more than half that. I wonder if they are intentionally trying to drive the property up with multiple bidders, or if they just recognize there isn’t much market for 7000+ sf houses in reno. It does seem like impressive quality for that price psf… if you can stand to live in Somersett… and pay nearly 15K in property taxes a year.
The same owner just lost 692 Palmer Ct in IV to another NOS after missing payments since May 09. I think BofA must have been miffed for the HELOC, because they had a NOD in place by october for failure to pay in may, and pushed straight through the mediation to NOS.
At least she was able to keep the 3700 sq ft house on 5 acres in Washoe Valley in her husband’s name…
skeptical
geopower,
Very impressive work. Between you and Mike, none of these shifty worms are safe.
Now, please don’t tell me that the madam involved had a job related to real estate? That would just fit way too well with the shady behavior.
billddrummer
To Mike and geopower,
Great jobs, both of you. I used to have time to do that from my office before all of our commercial deals started blowing up.
DownButNot Out
Hey bdd, how about treating us with some pertinent excerpts from your book?
DonC
These two listings seem to be at the opposite ends of the reasonable seller spectrum. 2440 Mountain Spirit seems priced aggressively. The property across the way from it, which was about half the SF, sold for about $600K last fall. Zillow on the other hand finds 701 Fairview to be worth about half the asking price, and that’s before applying adjustments for the fact it’s unfinished (if that’s the case).
I don’t think BTW that Smarten has said IV is immune to price declines. I think he’s said it isn’t. What I believe he has said is that you can find properties which are good values. Obviously 701 Fairview isn’t one of these, though, from the outside, to me the exterior is nice looking and the house has sweeping views. But realistically you’d have to be crazy to even think about paying anywhere near the asking price for this thing.
It will be interesting to see if either one sells.
Skeptical — Being over leveraged and getting hung out to dry isn’t a crime. In fact when times are good it makes you a financial genius who should be well respected by all — it’s always the eternal struggle between greed and fear. Not sure why this makes them “worms”.
billddrummer
To DBNO,
I sent an excerpt to Guy for his review. It is a broad brush view of the mortgage industry and how it decoupled income from home prices.
I’m deferring to the blogmaster as per its relevance.
skeptical
DonC,
The prudent bailing out the reckless. That’s what this entire financial disaster is about.
If you don’t think that someone squatting in their Somersett McMansion for up to 2 years rent/mortgage free is not a worm, then I know which side of the ledger you are on.
Sully
DonC;
According to the owners website, he claims the building code required him to withstand a 7.0 earthquake WITH a 20′ snow load. Million to one chance of these two happening together.
Personally, I think he should have gotten a contractor that didn’t bring everything in – one bucket at a time.
Then again, he paid $4 million for the 5 acre lot.
DonC
Skeptical — What you’re looking at is a banking failure, which is just another way of saying that capitalism failed. Had the financial markets been able to handle the liquidity we wouldn’t have the mess. (Countries which didn’t believe that markets delivered optimal returns managed to avoid the mess; countries which did didn’t. Maybe there is a truth hiding in there?)
BTW the bailout for the Savings & Loans in the 1980s was about 300% larger (in real dollars) than the current bailout. We survived S&L Bailout without a big problem and we’ll move on from this as well. However, unless we have financial reform we’ll just end up watching the same movie played over and over. The financial markets will just leverage up because the only way to get big bonuses is to produce above average returns, and the only way to produce above average returns is with leverage. Of course leverage is dangerous but when it’s not your money it’s not that big of a deal — except for the people stuck with the mess. You either understand this or you don’t. If you do, write your congressman or senator and tell them to get their butts in gear.
With respect to the people who owned 701 Fairview, I really don’t know anything about them. Who knows, maybe they got wiped out after investing with Bernie Madoff. Maybe they contracted a terminal disease or maybe they became seriously ill and didn’t have health coverage. Even if they just partied without regret, the worst you can say about them is that they waited for the bank to tell them to move. No crime there, and not terribly unlike what Diane did if the standard is that unless you pay the bank your last dollar you are an unredeemable sinner.
Sully — Ha ha. Yeah $4M is a little steep now. Then again, I once passed on paying $32K for a view lot in Seattle because I thought it was priced way too high. Four years later it sold for $275K. (Just one in a line of many missed opportunities.) Like I said, fear and greed. But once you’re into the bigger fool game it’s hard to know where to stop. I just wonder if the lender asked for $800K up front. That would be interesting to know.
billddrummer
To Mike McGonagle,
On 4/14/10, the number of NOS filed (339) surpassed the number of NODs filed (332) for the month of April.
The gap widened on 4/15/10.
This is unusual, and may be unprecedented.
inclinejj
We are in the 2nd wave of the residential melt down. In fact the 2nd wave is just starting.
Commerical real estate is just starting to show weakness and properties are starting to hit the court house steps.
The question is how many waves are coming in??
Don C. Get me the numbers on the Savings and Loans Crisis of the late 1980’s to mid 1990’s. The tax law changes in 1885 and 1986 changed the tax code on REIT and Commercial Property tax rules to the point many large shopping centers and apartments, office buildings just went back to the lenders and the S&L’s closed up shop and the Government took the bad loans and property in the RTC
billddrummer
According to Ticor Title, this hasn’t happened for an entire month since January 2007.